US Justice Department on the Hunt for DeFi Hackers and Thieves
The United States Department of Justice’s (DOJ) crypto tsar is cracking down on Decentralized Finance (DeFi) hackers and exploiters amid a four-year rise in illicit crypto activity.
Stepping up the Fight Against Crypto Crimes
In a Financial Times report published on May 15, Eun Young Choi, director of the Justice Department’s National Cryptocurrency Enforcement Team (NCET), stated that the department is focusing on thefts and hacks involving DeFi, and “particularly chain bridges.”
Choi said it was a “pretty significant issue” for the DOJ, given North Korean “state-sponsored hackers” have emerged as “key actors in this space.” North Korean hackers stole between an estimated $630 million to $1 billion of crypto assets in 2022, as per a Cointelegraph report.
Introducing the First Director of the NCET
The DOJ announced Choi — a prosecutor with nearly a decade of experience in the agency — as the first director of the NCET in February 2022. The NCET was set up as a “focal point” for the DOJ in tackling cryptocurrency, cybercrime, money laundering, and forfeiture.
Broadening the Scope: DeFi Platforms in Spotlight
While the DOJ initially highlighted that “mixing and tumbling services” would be a particular focus for the agency, it did not mention anything regarding DeFi platforms at the time. However, the situation seems to be evolving with increasing concerns over illicit activities related to DeFi.
A Multiplier Effect on Tackling Crime
Choi, speaking at the Financial Times Crypto and Digital Assets Summit, reassured that the DOJ is after crypto firms that either commit the crime or turn a blind eye to “obscure the trail of transactions.“ She noted:
“The DOJ is targeting companies that commit crimes themselves or allow them to happen, such as enabling money laundering.”
According to her, going after the platform itself will have a “multiplier effect” in terms of making it difficult for “criminal actors to easily profit from their crimes.”
Increasing Threats in the DeFi Landscape
The “scale and the scope of digital assets being used in a variety of illicit ways” has grown significantly over the last four years, Choi stated. DeFi platforms have indeed experienced a string of attacks in recent times.
The biggest DeFi hack so far this year was reported on March 13, with Euler Finance facing a flash loan attack with over $196 million in assets stolen. Additionally, in November 2022, DeFi trading platform Mango Markets fell victim to a massive exploit, leading to the draining of its entire liquidity.
The U.S. Justice Department’s intensified focus on DeFi platforms signifies the escalating concern about the potential misuse of this nascent technology. With Choi at the helm of the NCET, the fight against crypto crime continues, with the hope of making the DeFi landscape safer for all.
The DOJ’s proactive stance sends a clear message to the world – while innovation in the field of decentralized finance is welcomed, illicit activities and exploitation will be met with stringent action. As the landscape of financial technologies evolves, the watchdogs too are adapting their strategies to maintain the integrity of the system.
By targeting not only the individual hackers but also the platforms that allow such exploitation to take place, the DOJ aims to deter potential criminals and assure the public that the crypto space remains a safe environment for investment and innovation.
The recent events underline the importance of regulatory oversight in the rapidly advancing world of cryptocurrencies. As we move forward, it is anticipated that institutions like the DOJ will play a crucial role in shaping the future of decentralized finance, ensuring its growth is balanced with consumer protection and national security.
